... the Apple retail model is a classic reference point in advanced degree business/marketing programs.
I am not sure the business schools get it, either, because other companies aren't doing it.
The stores were not an attempt to make more money by squeezing middlemen or to lead a marketing push. The stores came from the growing appreciation at AAPL about the nature of selling things (partly through negative experiences and lessons learned). AAPL had some very very smart people.
Goods are not simply sold by manufacturers to consumers. They are sold along with services provided by the distributor / retailer -- like information. AAPL realized that as long as they were a niche player, the traditional outlets were not going to devote a lot of resources to providing these services...they were going to do a crummy job at telling people about the computers and providing shelf space for software and peripherals, etc. They tried essentially purchasing parts of the stores and providing extra training for personnel...but that didn't cut it. They could get angry with the retailers, but they appreciated that the retailers didn't have to lift a finger and the cheap pc's flew out the door...so why should they bust their butts to make a mac sale? The only way they were going to get a fair shake at the retail level was to have their own stores.
This is not intuitive...most people didn't get it...they did not understand the nature of selling things and thought this was some kind of play to enter the retailing business. But it was not (IMO). It was part of understanding the nature of selling things and the importance of the services provided by distributors/retailers.
The stores could break even as far as they were concerned...the alternative to the stores was dealing with consumer perception that the computer wasn't viable and that the complementary products (software, peripherals, services, books, etc.) were unavailable. This is how niche products die. The stores served as a kind of beacon...that the platform was viable, that services were available, and peripherals were easy to buy. No problem figuring out if a peripheral was mac-compatible...and that there was something significant ... that these computers were not going to be sold side by side with the cheap-o's....they were not another player in the home computer market...they were the only player in the Mac market...you hear this repeated in different forms all the time by the marketing people.
The strong success of the stores has been a surprise, I think, to the people who conceived of them...but good work by the marketing people has been matched by the good work of the product development people. The hardware has improved, the software has improved, the products are distinctive, and by branching out beyond computers .... the "niche" nature of Apple products has gone from being a liability to a major asset. Better products made the stores a profit source (and no longer a way to prevent the platform from being choked off by the economics of retailing).
I am also curious about how the Microsoft store(s) are doing and think it deserves a comment in the story since Microsoft's goal was to copy Apple's success (nothing new there).
How many are there now? What kind of traffic do they receive? What products do they sell (a particular brand of pc).? Do they have a genius bars? And, finally, if so, how good are they at supporting the mishmash of software/hardware configurations?
DISCLAIMER: Source is MacDailyNews and Business Insider (SAI)
In an article posted today, MacDailyNews covered a story by Matt Rosoff, who reports that MSFT executives Steve Ballmer and COO Kevin Turner want to drive opening enough Microsoft retail stores to outpace Apple's retail footprint (currently 320). The controversy stems from the fact that the Microsoft stores are expensive high-profile storefronts positioned adjacent to or opposite an existing Apple retail store, and most are allegedly not making any money from sales. This is speculated to be due to the many other retail outlets provisioning Microsoft products. In order to compete at the level Ballmer reportedly wants Microsoft would have to open more than the current 8 stores per year, which would add significantly to to capital expenditures under the scrutiny of shareholders already concerned about existing declines in flagship revenue engines.
With Apple opening an estimated 32 stores per year since 2001, that would require a heavy opening schedule by Microsoft to catch and surpass Apple's retail presence.
Microsoft has been very reserved about the stores' revenues and only report to queries that they are "doing well". Traffic count heavily favors Apple retail stores compared to their adjacent Microsoft stores, but actual purchase estimates are completely anecdotal and there are no relevant statistics to compare.
I am not sure the business schools get it, either, because other companies aren't doing it.
The stores were not an attempt to make more money by squeezing middlemen or to lead a marketing push. The stores came from the growing appreciation at AAPL about the nature of selling things (partly through negative experiences and lessons learned). AAPL had some very very smart people.
Goods are not simply sold by manufacturers to consumers. They are sold along with services provided by the distributor / retailer -- like information. AAPL realized that as long as they were a niche player, the traditional outlets were not going to devote a lot of resources to providing these services...they were going to do a crummy job at telling people about the computers and providing shelf space for software and peripherals, etc. They tried essentially purchasing parts of the stores and providing extra training for personnel...but that didn't cut it. They could get angry with the retailers, but they appreciated that the retailers didn't have to lift a finger and the cheap pc's flew out the door...so why should they bust their butts to make a mac sale? The only way they were going to get a fair shake at the retail level was to have their own stores.
This is not intuitive...most people didn't get it...they did not understand the nature of selling things and thought this was some kind of play to enter the retailing business. But it was not (IMO). It was part of understanding the nature of selling things and the importance of the services provided by distributors/retailers.
The stores could break even as far as they were concerned...the alternative to the stores was dealing with consumer perception that the computer wasn't viable and that the complementary products (software, peripherals, services, books, etc.) were unavailable. This is how niche products die. The stores served as a kind of beacon...that the platform was viable, that services were available, and peripherals were easy to buy. No problem figuring out if a peripheral was mac-compatible...and that there was something significant ... that these computers were not going to be sold side by side with the cheap-o's....they were not another player in the home computer market...they were the only player in the Mac market...you hear this repeated in different forms all the time by the marketing people.
The strong success of the stores has been a surprise, I think, to the people who conceived of them...but good work by the marketing people has been matched by the good work of the product development people. The hardware has improved, the software has improved, the products are distinctive, and by branching out beyond computers .... the "niche" nature of Apple products has gone from being a liability to a major asset. Better products made the stores a profit source (and no longer a way to prevent the platform from being choked off by the economics of retailing).
Very good observations Sammy. I don't know if you've had a chance to look over some of the data and commentary at ifoAppleStore.com, but they do some very detailed review of the phenomenon: http://www.ifoapplestore.com/the_stores.html
It includes the study published by Prof. Alex Chernev at Northwestern University, and analysis of architectural, signage, fixtureand building materials firms used by Apple for the stores.
it amazes me how nearly all the (so-called) pundits and analysts totally miss the crucial role of the retail stores in Apple's "ecosystem."
they add a unique human element to everything Apple. someone to answer questions knowledgeably when you are investigating products. someone to help you at no charge when you have a problem. immediate warranty service when necessary. plenty of time (usually) for hands-on exploration of new products. no annoying salesperson hustle.
this all provides essential emotional support for non-technie consumers that no other company can (e.g., Amazon and Google) or will (e.g., HP and Dell). Sony did try, with the SonyStyle stores, and now MS. but they wind up being geek hangouts at best.
this is all not really "free" of course. the cost of all this is part of the price you pay for Apple products. but you get something very tangible in return.
there are many innovations responsible for Apple's success, but IMHO no single one is more important than the retail stores.
i just wish the store here in SF was twice as big - it's jammed much of the time.
It includes the study published by Prof. Alex Chernev at Northwestern University, and analysis of architectural, signage, fixtureand building materials firms used by Apple for the stores.
So my point would partly match the article. The branding...has been outstanding. The stores are part of the branding. Jonny Ive is the tip of the distinctive iceberg. There is an "Apple Way" to sell consumer electronics. And...that this Apple Way is driven by the principles of the economics of distribution (notice all the things they do in the store that involve the provision of "services" above and beyond the product itself. We can broadly talk about "user experience" but if you go to the marketing/econ literature and look at the theoretical treatment of distribution...you will see AAPL.
But in addition to this...I would argue that the strategic decisions made by AAPL go beyond mere branding. It is a synthesis of marketing and network economics. If you are going to be a company that develops innovative products, you need a strategy for marketing these innovative products, and for making a profit off innovative products (essentially, if you innovate, what are you going to do to prevent copycats from coming in and doing the same thing and undercutting your prices).
I am not sure the business schools get it, either, because other companies aren't doing it.
I fully agree (for years in fact) with your comment.
In France, it's obvious what happens now it's the same what happened in the US. : the apple store allows Apple to create a viable space for Mac.
FNAC (computer/music/book shops) and others (auchan, darty...) was detrimental for macintosh computers : they provided bad services or even sometimes false information. PC was easier for them to sell, why they should learn stuff about mac ? just sell generic cheap pc.
Apple tried to buy space in shops, FNAC ones of course, with paid by Apple employees but in the end, it's not the interest of FNAC to sold mac products : they are competing with Apple on the Apple Care services (!) and they can't provide good informations.
The Apple Store totally changed the market in Paris.
"At this point only Amazon and Google have any chance, if they have the patience, to develop a competing ecosystem over time. But the relentless drive for short term profit works against them.
"
yes. I do think Amazon could be a worthy future competitor.
Amazon has computing knowledge (S3 and others), has a good brand, is very able to sell and distribute a tons of stuff, and slowly is making a new platform starting with a core feature (the kindle for reading).
Amazon has to resist short term profit.
-
google is an advertisement company. they only participate in the consumer product by indirect partnership. Google is a lot more like Microsoft. Amazon is slowly becoming like Apple.
Of all the things the ?expert? get wrong this one I let slide. From their PoV the Dell kiosks and Gateway stores (that only had demos not actual products) and high end Sony stores (lucky to end the year in black) covered all the ways in which Apple could operate and therefore left no window for success Apple could use to their advantage. There was no precedence for this.
I thought this had a good chance of succeeding because prior to the Apple Store it was difficult for potential customers to try a Mac and ask needed questions. Sure there we some stores with a small table listing some, often out of dat Macs that may or may not be working. What I didn?t know is how much of n effect the Stores would have for adoption and how quickly they would grow to be the largest retailer by sq. foot in the world.
PS: In case some aren?t aware, Apple stopped requiring a 10% restocking fee for items a month or two ago. So, if yo are expecting expecting a new Mac in a few weeks but need a Mac now it?s not a bad move to buy now and then return it if the new Mac appears. with that 14 day time frame.
it amazes me how nearly all the (so-called) pundits and analysts totally miss the crucial role of the retail stores in Apple's "ecosystem."
they add a unique human element to everything Apple. someone to answer questions knowledgeably when you are investigating products. someone to help you at no charge when you have a problem. immediate warranty service when necessary. plenty of time (usually) for hands-on exploration of new products. no annoying salesperson hustle.
this all provides essential emotional support for non-technie consumers that no other company can (e.g., Amazon and Google) or will (e.g., HP and Dell). Sony did try, with the SonyStyle stores, and now MS. but they wind up being geek hangouts at best.
this is all not really "free" of course. the cost of all this is part of the price you pay for Apple products. but you get something very tangible in return.
there are many innovations responsible for Apple's success, but IMHO no single one is more important than the retail stores.
i just wish the store here in SF was twice as big - it's jammed much of the time.
AGREED .
Apple stores way back when became a pin the balloon for all things apple gone bad or wrong .
Many many times i returned an ipod for whatever reason and got a new one for free . no questions asked . i am a pro care client of course but apple workers really took care of us
only the games area sucked .
it not the same now
apple workers are spoiled . the halo effect has blinded them to the old hard sales days . apple stores are better now in many ways also . And the profit for items sold in a store in very very high compared to selling macs out of a best buy type area .
so the cult era is over in the USA apple stores but go to the rest of the world and the apple store is a golden place to visit and hang out with loved ones .
WHEN all this new product hype dies down and apple get so big its 10x the size of gates old comp.
APPLE WILL have 2 great things to keep the dream alive and making tons of money
They took it back after that long? I thought the time frame was 14 days?
SORRY I AM OFF .this just happened I bought a 15"high res matte screen on advice from an apple phone sales person .
and the matte screen was horrible . yuck .
I just check my time frame and it was 16 days to return and 28 DAYS to receive my new glossy MBP 15"2.3HGz intel core I7 8G . So 16 days to return and 28 days total to get the mbp correct
Comments
... the Apple retail model is a classic reference point in advanced degree business/marketing programs.
I am not sure the business schools get it, either, because other companies aren't doing it.
The stores were not an attempt to make more money by squeezing middlemen or to lead a marketing push. The stores came from the growing appreciation at AAPL about the nature of selling things (partly through negative experiences and lessons learned). AAPL had some very very smart people.
Goods are not simply sold by manufacturers to consumers. They are sold along with services provided by the distributor / retailer -- like information. AAPL realized that as long as they were a niche player, the traditional outlets were not going to devote a lot of resources to providing these services...they were going to do a crummy job at telling people about the computers and providing shelf space for software and peripherals, etc. They tried essentially purchasing parts of the stores and providing extra training for personnel...but that didn't cut it. They could get angry with the retailers, but they appreciated that the retailers didn't have to lift a finger and the cheap pc's flew out the door...so why should they bust their butts to make a mac sale? The only way they were going to get a fair shake at the retail level was to have their own stores.
This is not intuitive...most people didn't get it...they did not understand the nature of selling things and thought this was some kind of play to enter the retailing business. But it was not (IMO). It was part of understanding the nature of selling things and the importance of the services provided by distributors/retailers.
The stores could break even as far as they were concerned...the alternative to the stores was dealing with consumer perception that the computer wasn't viable and that the complementary products (software, peripherals, services, books, etc.) were unavailable. This is how niche products die. The stores served as a kind of beacon...that the platform was viable, that services were available, and peripherals were easy to buy. No problem figuring out if a peripheral was mac-compatible...and that there was something significant ... that these computers were not going to be sold side by side with the cheap-o's....they were not another player in the home computer market...they were the only player in the Mac market...you hear this repeated in different forms all the time by the marketing people.
The strong success of the stores has been a surprise, I think, to the people who conceived of them...but good work by the marketing people has been matched by the good work of the product development people. The hardware has improved, the software has improved, the products are distinctive, and by branching out beyond computers .... the "niche" nature of Apple products has gone from being a liability to a major asset. Better products made the stores a profit source (and no longer a way to prevent the platform from being choked off by the economics of retailing).
I am also curious about how the Microsoft store(s) are doing and think it deserves a comment in the story since Microsoft's goal was to copy Apple's success (nothing new there).
How many are there now? What kind of traffic do they receive? What products do they sell (a particular brand of pc).? Do they have a genius bars? And, finally, if so, how good are they at supporting the mishmash of software/hardware configurations?
DISCLAIMER: Source is MacDailyNews and Business Insider (SAI)
In an article posted today, MacDailyNews covered a story by Matt Rosoff, who reports that MSFT executives Steve Ballmer and COO Kevin Turner want to drive opening enough Microsoft retail stores to outpace Apple's retail footprint (currently 320). The controversy stems from the fact that the Microsoft stores are expensive high-profile storefronts positioned adjacent to or opposite an existing Apple retail store, and most are allegedly not making any money from sales. This is speculated to be due to the many other retail outlets provisioning Microsoft products. In order to compete at the level Ballmer reportedly wants Microsoft would have to open more than the current 8 stores per year, which would add significantly to to capital expenditures under the scrutiny of shareholders already concerned about existing declines in flagship revenue engines.
With Apple opening an estimated 32 stores per year since 2001, that would require a heavy opening schedule by Microsoft to catch and surpass Apple's retail presence.
Microsoft has been very reserved about the stores' revenues and only report to queries that they are "doing well". Traffic count heavily favors Apple retail stores compared to their adjacent Microsoft stores, but actual purchase estimates are completely anecdotal and there are no relevant statistics to compare.
I am not sure the business schools get it, either, because other companies aren't doing it.
The stores were not an attempt to make more money by squeezing middlemen or to lead a marketing push. The stores came from the growing appreciation at AAPL about the nature of selling things (partly through negative experiences and lessons learned). AAPL had some very very smart people.
Goods are not simply sold by manufacturers to consumers. They are sold along with services provided by the distributor / retailer -- like information. AAPL realized that as long as they were a niche player, the traditional outlets were not going to devote a lot of resources to providing these services...they were going to do a crummy job at telling people about the computers and providing shelf space for software and peripherals, etc. They tried essentially purchasing parts of the stores and providing extra training for personnel...but that didn't cut it. They could get angry with the retailers, but they appreciated that the retailers didn't have to lift a finger and the cheap pc's flew out the door...so why should they bust their butts to make a mac sale? The only way they were going to get a fair shake at the retail level was to have their own stores.
This is not intuitive...most people didn't get it...they did not understand the nature of selling things and thought this was some kind of play to enter the retailing business. But it was not (IMO). It was part of understanding the nature of selling things and the importance of the services provided by distributors/retailers.
The stores could break even as far as they were concerned...the alternative to the stores was dealing with consumer perception that the computer wasn't viable and that the complementary products (software, peripherals, services, books, etc.) were unavailable. This is how niche products die. The stores served as a kind of beacon...that the platform was viable, that services were available, and peripherals were easy to buy. No problem figuring out if a peripheral was mac-compatible...and that there was something significant ... that these computers were not going to be sold side by side with the cheap-o's....they were not another player in the home computer market...they were the only player in the Mac market...you hear this repeated in different forms all the time by the marketing people.
The strong success of the stores has been a surprise, I think, to the people who conceived of them...but good work by the marketing people has been matched by the good work of the product development people. The hardware has improved, the software has improved, the products are distinctive, and by branching out beyond computers .... the "niche" nature of Apple products has gone from being a liability to a major asset. Better products made the stores a profit source (and no longer a way to prevent the platform from being choked off by the economics of retailing).
Very good observations Sammy. I don't know if you've had a chance to look over some of the data and commentary at ifoAppleStore.com, but they do some very detailed review of the phenomenon: http://www.ifoapplestore.com/the_stores.html
It includes the study published by Prof. Alex Chernev at Northwestern University, and analysis of architectural, signage, fixtureand building materials firms used by Apple for the stores.
they add a unique human element to everything Apple. someone to answer questions knowledgeably when you are investigating products. someone to help you at no charge when you have a problem. immediate warranty service when necessary. plenty of time (usually) for hands-on exploration of new products. no annoying salesperson hustle.
this all provides essential emotional support for non-technie consumers that no other company can (e.g., Amazon and Google) or will (e.g., HP and Dell). Sony did try, with the SonyStyle stores, and now MS. but they wind up being geek hangouts at best.
this is all not really "free" of course. the cost of all this is part of the price you pay for Apple products. but you get something very tangible in return.
there are many innovations responsible for Apple's success, but IMHO no single one is more important than the retail stores.
i just wish the store here in SF was twice as big - it's jammed much of the time.
It includes the study published by Prof. Alex Chernev at Northwestern University, and analysis of architectural, signage, fixtureand building materials firms used by Apple for the stores.
So my point would partly match the article. The branding...has been outstanding. The stores are part of the branding. Jonny Ive is the tip of the distinctive iceberg. There is an "Apple Way" to sell consumer electronics. And...that this Apple Way is driven by the principles of the economics of distribution (notice all the things they do in the store that involve the provision of "services" above and beyond the product itself. We can broadly talk about "user experience" but if you go to the marketing/econ literature and look at the theoretical treatment of distribution...you will see AAPL.
But in addition to this...I would argue that the strategic decisions made by AAPL go beyond mere branding. It is a synthesis of marketing and network economics. If you are going to be a company that develops innovative products, you need a strategy for marketing these innovative products, and for making a profit off innovative products (essentially, if you innovate, what are you going to do to prevent copycats from coming in and doing the same thing and undercutting your prices).
I am not sure the business schools get it, either, because other companies aren't doing it.
I fully agree (for years in fact) with your comment.
In France, it's obvious what happens now it's the same what happened in the US. : the apple store allows Apple to create a viable space for Mac.
FNAC (computer/music/book shops) and others (auchan, darty...) was detrimental for macintosh computers : they provided bad services or even sometimes false information. PC was easier for them to sell, why they should learn stuff about mac ? just sell generic cheap pc.
Apple tried to buy space in shops, FNAC ones of course, with paid by Apple employees but in the end, it's not the interest of FNAC to sold mac products : they are competing with Apple on the Apple Care services (!) and they can't provide good informations.
The Apple Store totally changed the market in Paris.
"
yes. I do think Amazon could be a worthy future competitor.
Amazon has computing knowledge (S3 and others), has a good brand, is very able to sell and distribute a tons of stuff, and slowly is making a new platform starting with a core feature (the kindle for reading).
Amazon has to resist short term profit.
-
google is an advertisement company. they only participate in the consumer product by indirect partnership. Google is a lot more like Microsoft. Amazon is slowly becoming like Apple.
Of all the things the ?expert? get wrong this one I let slide. From their PoV the Dell kiosks and Gateway stores (that only had demos not actual products) and high end Sony stores (lucky to end the year in black) covered all the ways in which Apple could operate and therefore left no window for success Apple could use to their advantage. There was no precedence for this.
I thought this had a good chance of succeeding because prior to the Apple Store it was difficult for potential customers to try a Mac and ask needed questions. Sure there we some stores with a small table listing some, often out of dat Macs that may or may not be working. What I didn?t know is how much of n effect the Stores would have for adoption and how quickly they would grow to be the largest retailer by sq. foot in the world.
PS: In case some aren?t aware, Apple stopped requiring a 10% restocking fee for items a month or two ago. So, if yo are expecting expecting a new Mac in a few weeks but need a Mac now it?s not a bad move to buy now and then return it if the new Mac appears. with that 14 day time frame.
I returned a 2900$ mbp after 26 days ..
I returned a 2900$ mbp after 26 days ..
They took it back after that long? I thought the time frame was 14 days?
it amazes me how nearly all the (so-called) pundits and analysts totally miss the crucial role of the retail stores in Apple's "ecosystem."
they add a unique human element to everything Apple. someone to answer questions knowledgeably when you are investigating products. someone to help you at no charge when you have a problem. immediate warranty service when necessary. plenty of time (usually) for hands-on exploration of new products. no annoying salesperson hustle.
this all provides essential emotional support for non-technie consumers that no other company can (e.g., Amazon and Google) or will (e.g., HP and Dell). Sony did try, with the SonyStyle stores, and now MS. but they wind up being geek hangouts at best.
this is all not really "free" of course. the cost of all this is part of the price you pay for Apple products. but you get something very tangible in return.
there are many innovations responsible for Apple's success, but IMHO no single one is more important than the retail stores.
i just wish the store here in SF was twice as big - it's jammed much of the time.
AGREED .
Apple stores way back when became a pin the balloon for all things apple gone bad or wrong .
Many many times i returned an ipod for whatever reason and got a new one for free . no questions asked . i am a pro care client of course but apple workers really took care of us
only the games area sucked .
it not the same now
apple workers are spoiled . the halo effect has blinded them to the old hard sales days . apple stores are better now in many ways also . And the profit for items sold in a store in very very high compared to selling macs out of a best buy type area .
so the cult era is over in the USA apple stores but go to the rest of the world and the apple store is a golden place to visit and hang out with loved ones .
WHEN all this new product hype dies down and apple get so big its 10x the size of gates old comp.
APPLE WILL have 2 great things to keep the dream alive and making tons of money
Apple stores and Itunes stores .
9
They took it back after that long? I thought the time frame was 14 days?
SORRY I AM OFF .this just happened I bought a 15"high res matte screen on advice from an apple phone sales person .
and the matte screen was horrible . yuck .
I just check my time frame and it was 16 days to return and 28 DAYS to receive my new glossy MBP 15"2.3HGz intel core I7 8G . So 16 days to return and 28 days total to get the mbp correct
SORRY dude .
Anyway the MBP I got really rocks
ps i always thought it was 30 days
9